IBM: Midsize Companies Must Work Smarter, Leaner

A new IBM-sponsored study shows that although the economy is driving midsize companies to work smarter and leaner, many are not actually decreasing their investments in IT, but maintaining current levels or increasing their IT spend to focus on strategic areas.

A new IBM-sponsored study shows that although the economy is driving
midsize companies to work smarter and leaner, many are not actually
decreasing their investments in IT, but maintaining current levels or
increasing their IT spend to focus on strategic areas.
And despite pressure to cut costs, these midsize companies are
proceeding with IT plans that range from information management to
social media and cloud computing.

Moreover, the survey conducted in April and May of 2009 shows that
midsize companies are aware that they need to work smarter and leaner,
but overall appear undaunted by the recession. The "Inside the
Midmarket: A 2009 Perspective" study surveyed 1,879 business and IT
decision makers in 17 countries to get insights into their business
plans and challenges, growth and innovation strategies, IT purchasing
trends, and industry-specific pain points, IBM officials said.

IBM officials said the study reveals five key trends:

1. The highest-priority technology solution, chosen by 75 percent of
respondents, is Information Management, which turns mountains of data
into meaningful insights.
2. The most pressing business challenges include increasing
efficiency and productivity (80 percent), improving customer care (74
percent) and better use of information (72 percent).
3. The impact of the economy on IT budgets has caused 53 percent to
actually increase or re-prioritize their spending, with 37 percent
reporting a decrease.
4. Despite the economy, more than two-thirds of those surveyed are planning or currently implementing their top IT priorities.
5. A majority of firms view their primary IT provider as a
technology adviser or IT and business consultant, with 25 percent
seeing the relationship as purely transactional.

Information management was ranked as the most critical IT priority
for improving business performance by the largest majority of
participants. At a time when digital information is growing every day
at a rate eight times the volume housed in all U.S. libraries,
organizations need smarter ways to cope with the increasing information
overload by turning this data into real intelligence, IBM said
One such IBM customer is doing just that. Delta Natural Gas Company
is a midsize company based in Winchester, Ky., that sells and transports
natural gas to 38,000 customers in central and southeastern Kentucky.
"Turning data into information we can use to make better decisions
is critical to the success of Delta Natural Gas Company," said manager
- Accounting & IT, Matthew Wesolosky, in a statement. "We've been
using IBM Cognos products for more than 10 years. It's at the core of
our financial reporting process and we are constantly pushing the
limits of the software. We use the products to continually
improve our management reporting and strengthen our internal controls."
"Midmarket organizations openly acknowledge the challenges posed by
the current economy, but they aren't paralyzed into inaction," said
Marc Dupaquier, general manager, IBM Global Midmarket, in a statement.
"In spite of tough economic conditions and concerns about lack of
implementation skills, they are continuing to spend and plan against
their key IT projects to support their business goals. This study
clearly shows that midsize companies, which we believe will be the
engines that lead us back to economic growth, are being cautiously
optimistic and proactive."
Indeed, 53 percent of the survey respondents said their IT budgets
are either increasing or remaining the same but with shifting
priorities. Of that 53 percent figure, 39 percent said they are
maintaining current IT spending levels and 14 percent said they are
increasing their IT budgets. Meanwhile, 10 percent report no change,
while 37 percent are reducing their budget. According to study data,
most are holding or increasing their budgets to use IT to help drive
efficiencies or reduce costs in other areas of the business or better
connect with customers.
The survey also illustrates the growing role of emerging
technologies, such as cloud computing, green IT, and social media,
which are areas that were not included in a similar IBM study conducted
in 2007. Although these areas showed up lower on the scale of critical
priorities, midmarket companies are actively pursuing several emerging
technology areas to improve performance, IBM said. The survey shows
that 79 percent intend to implement or have established goals to
implement Green IT solutions, while 71 percent said they have plans to
implement Web2.0/social media solutions and 69 percent said the same
for cloud computing solutions.
The midmarket could potentially play a key role in re-energizing the
economy. Indeed, according to IBM's study, with companies of 500 or
fewer employees generating about 60 percent to 80 percent of net new
jobs annually over the last decade, these small and medium businesses
could help pave the way back to economic growth for the IT industry.

Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.